Site Navigation

Site Mobile Navigation

What Spending Freeze?

President Obama is clearly trying to position himself as a sensible moderate in the pitched debate over our budget future, with carefully poll-tested language about “fiscal responsibility” and “investments” for our future prosperity. Unfortunately, the numbers betray his inviting and seemingly benign rhetoric.

A long-term trend of spending increases and higher taxes fueling an oversized government.

Despite flashy headlines of “deep cuts” to spending, the long-term trend remains one of steep spending increases and tax hikes fueling an oversized federal government. For example, take the president’s much-hyped $400 billion discretionary spending “freeze.” While enacting a freeze of this sort is clearly preferable to endlessly expanding agency budgets, it gives the impression that federal spending will not rise substantially in the coming years when in fact total outlays will grow from about $3.7 trillion next year to almost $5.7 trillion in 2021.

It should also be noted that the levels at which we’re freezing those budgets were already subject to dramatic hikes in the last two years. From 2008 to 2010, non-defense discretionary spending exploded at a 24 percent rate even when you exclude the so-called “stimulus” bill. If the stimulus is included, those budgets expanded by close to 84 percent! Those increases were unwarranted at the time and should be reversed, not enshrined into law with a spending freeze. Furthermore, that $400 billion in savings represents less than one percent of total spending over the next 10 years. Better than nothing? Sure, but neither is it a profile in budgetary courage.

The president’s laudable steps to restrain spending in some areas do little to soften the blow of some very disturbing numbers. The smallest amount of single-year overspending in the coming decade is $607 billion in 2015, which is higher in absolute terms than any deficit from 1940 to 2008. It is hard to take claims of fiscal responsibility seriously when the administration projects that even the best year out of the next 10 shows overspending at World War II levels, with no end in sight.

The president’s budget also continues to seek enormous tax hikes to fund his agenda. The tax increases add up to roughly $1.5 trillion over the next 10 years and the administration estimates that tax revenue will grow to 20 percent of gross domestic product by 2021, well above the post-World War II average of roughly 18 percent. The budget envisions big tax hikes on high-income individuals, banks, and the energy industry just to name a few of the politically-convenient targets.

While President Obama is to be commended for some of the specific spending reductions he has laid out, they aren’t nearly enough to wipe out the $7.2 trillion of additional debt our country will face under his blueprint.